Chch pay rates push labour costs up 0.5pc

A new shop being built in Christchurch. A lift in labour pay rates in Canterbury pushed up national figures released by Statistics NZ today. Photo / Geoff Sloan

New Zealand's wage inflation was paced by the construction sector in Canterbury as the rebuild of the country's second-biggest city continues to pick up pace.

Private sector salary and ordinary time wages rose 0.5 per cent in the three months ended September 30, unchanged from the June quarter, according to Statistics New Zealand's labour cost index. That was in line with economists' expectations in a Reuters survey. Public sector wage inflation was 0.4 per cent in the quarter.

The national pace was led by a 0.7 per cent increase in labour costs for Canterbury's construction sector, which has started showing signs of gathering pace in recent months.

Last month, contract labour firm AWF Group said demand for its services as the country's biggest provider of temporary staff indicated the Canterbury recovery was gaining momentum, with firms usually willing to take on casual staff before committing to permanent employees.

Today's figures precede Thursday's household labour force survey, which is forecast to show a small fall in the unemployment rate to 6.7 per cent and a 0.3 per cent pick-up in jobs growth.

New Zealand's labour market has been slow to recover from the nation's deepest recession in two decades, with employers more willing to take on part-time staff than stack their books with full-timers.

Last month, the New Zealand Institute of Economic Research's quarterly survey of business opinion showed labour conditions softened in the quarter.

Statistics New Zealand's quarterly employment survey, also released today, showed total filled jobs rose 0.3 per cent to a seasonally adjusted 1.715 million, pipping the 0.2 per cent growth expected by economists. That was bolstered by a pick-up in part-time workers, with a 0.1 per cent decline in full-time equivalents to 1.35 million.

Manufacturing FTEs shrank 4 per cent to an actual 165,600 while professional, scientific, technical, administrative and support services declined 4.7 per cent to 176,600. Manufacturing typically experiences a fall in FTEs in the September quarter.

Local manufacturer Rakon, which makes components for smart phones and navigation devices, today announced plans to lay-off up to 60 workers at its New Zealand facility and shift that work to its Chinese and Indian factories as it looks to cut costs and fatten its tight margins.

Today's figures showed total paid hours shrank 0.3 per cent to a seasonally adjusted 51.8 million in the quarter, missing the 0.1 per cent increase predicted.

Private sector wages climbed 1.4 per cent to $26.26 an hour, up from 0.2 per cent growth in the June quarter and ahead of the 1.1 per cent forecast.